One thing I forgot to spot-light but only mentioned in the story above, is that gyroscopes ordinarily burn battery power, because they use a resonator that has to be running full speed before the sensor works. However, Bosch has set-up its combo accelerometer/gyroscope chip so that the gyro, even though it is internal, can still be turned off by the accelerometer when the device is idle for a while.

I agree to everything above. In the long run combo sensors will prevail. As product manager at Bosch Sensortec I strongly believe that Bosch Sensortec's strong MEMS integration competence paired with holding the key MEMS technologies and the sensor data fusion know-how in-house is an inherent advantage. The picture above shows the eCompass BMC050, a 6-axis device consisting of a state-of-the-art 3-axis accelerometer and a high performance 3-axis geomagnetic sensor. It is another example for Bosch defining the standard for the smallest footprint.

Yes, dead reckoning in navigators like Garmin when GPS is blocked will be one application, and Bosch supplies the sensor fusion software to make that happen. However, the higher-volume usage, Bosch hopes, will be in replacing with this single chip the separate chips for accelerometer and gyroscope in smartphones and tablets like the iPhone and iPad.

Exactly Les. Inertial navigation would be significantly easier. I can see lots of products being helped out especially small micro drones and radio control craft of all sorts. Could be used to track items or people beyond the reach of GPS (for good or bad).

I forgot to mention that Invensense also already has the holy-grail of inertial navigation--a complete nine-axis inertial navigation unit (INU) that includes an AKM magnetometer along with its own six-axis combo chip with accelerometer+ gyro (IMU):
http://www.eetimes.com/electronics-news/4234028/Invensense-tips-single-chip-inertial-navigation-unit
Also Bosch has a eCompass, a six-axis accelerometer plus magnetometer of its own design:
http://www.eetimes.com/electronics-news/4230344/MEMS-on-parade-at-Executive-Congress
And its only a matter of time until Bosch, and STMicroelectronics for that matter, release complete nine-axis INUs too.

Bosch is not the first to integrate a gyroscope and an accelerometer onto the same chip. Combo chips are already available from Invensense:
http://www.eetimes.com/electronics-news/4210545/MEMS-gyro-accelerometer-combo-chip-debuts
However, Bosch's manufacturing muscle as the world volume leader in MEMS worldwide may attract mainstream smartphones since it takes the place of separate chips for accelerometer and gyroscope. STMicro, which supplies the iPhone today, has a combo chip with three-axis accelerometer and two-axis gyroscope, that it sells to Movea for its pointing TV remote controls:
http://www.eetimes.com/electronics-news/4086665/Gyroscope-and-accelerometer-share-MEMS-package
However, today Apple smartphones and tablets still use separate accelerometer and gyroscope chips, both from STMicroelectronics.